History repeats itself. If we go by this principle, Bitcoin should flutter like a butterfly. In April, it closed its fourth consecutive month in the green zone, demonstrating the longest winning streak since 2020–2021. When the token grew for four or more months in a row in the past, it added 260% to its value the following year. Based on current prices, this suggests a BTC/USD rally to the $100,000 mark. However, things do not always work out the same way.
At first glance, the main driver of Bitcoin's growth is the banking crisis. The undermining of trust in credit institutions due to their bankruptcies and in fiat currencies contributes to the capital inflow into the crypto sphere. Tokens are an alternative to bank deposits, the outflow of which underlies the current crisis. If so, the collapse of regional banks' stocks should have pushed BTC/USD quotes above $30,000. But it didn't happen. Why?
Dynamics of American banks' stocks
First, there is a risk of losing. Out of 40,000 tokens issued in 2022, a quarter turned out to be fraudulent. Even investing funds in the most reliable crypto assets and crypto institutions does not guarantee money preservation. The collapses of Terra and FTX prove this. The Securities Commission now has claims against Binance, and the bankruptcy of one of the largest crypto creditors, Genesis, is comparable to First Republic's demise.
Second, the plummeting bank stocks are dragging down the U.S. stock indices. As a result, risk appetite worsens, and the first to be hit are income-generating assets. And Bitcoin, having added 70% to its value since the beginning of the year, is among the casualties. It should be noted that the token is resisting. This leads to a decrease in BTC/USD correlation with the S&P 500.
Dynamics of Bitcoin and its correlation with the S&P 500
At the same time, not all stock indices are the same. The crypto sector leader has the strongest connection with the Nasdaq Composite. And JP Morgan's recommendation to buy this asset, as well as gold in case of a recession in the U.S. economy, is pleasing to Bitcoin fans.
In my opinion, the banking crisis brings more positive than negative to crypto assets. The collapse of credit institutions' stocks when the market seems to have calmed down is a peculiar pressure on the Federal Reserve. Indeed, many of those issuers whose stocks fell had profits in the first quarter. First Republic was absorbed by a larger bank. Everything is calm? Not at all! The Federal Reserve is simply obliged to make a "dovish" turn to save the entire system.
If the Central Bank starts lowering rates, the U.S. dollar will weaken. This news is good for the entire crypto asset sector. If trust in fiat money is undermined, Bitcoin and its analogs will thrive.
Technically, the BTC/USD exit from the triangle and consolidation above the fair value of $29,250 are necessary conditions for the recovery of the upward trend. In such a scenario, we increase purchases towards the target at 161.8% according to the AB=CD pattern. It is located near the $33,500 mark.
